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My previous post mentioned various hallmarks of civilization: liberty, complexity, and change, among others. But why is civilization a Good? We speak of “advanced civilizations,” but what does that mean? How does one measure one civilization against another? How is one civilization more advanced than another?

In the spirit of Mises, I would venture that the fundamental measure of a civilization is the wants that it meets: the number of those wants, the diversity of those wants, the character of those wants. A civilization that is able to meet many wants can support many people. And as one person among an growing population, any particular human desires to be different – so the wants diversify as they grow in number. And the particular human also wants to be seen as special, so the character of the wants deepens as well.

The number of wants is an obvious measure after reading Mises. The subjective theory of value at the root of all human action is based on the presupposition of individual wants. And any advanced civilization meets a vast number of wants; A group of troglodytes banging rocks together fulfills very few of anyone’s wants.

The diversity of wants implies the liberty needed to meet them. Overbearing states and dictatorships emphasize the wants of the (few) rulers over the many, thus creating a relative monoculture of wants being met. Thus the advance of civilization is stalled by a preponderance of government. Of course, the wants of specific groups of society (like intellects, like women) need protection afforded by government so every civilization must solve the balance of government and growth.

The character of the wants is also important – a civilization does not advance by merely meeting the simple wants of more and more children. So the intellects of society must have the greater freedom in society to propose and develop highly-sophisticated wants. The highest intellects of society thus become the vanguard of any civilization’s advance.

Many of the wants of society come from the female members of that society, so an enormous part of the measure of any civilization is the number of wants met for females. How well a civilization helps females to raise children, how well a civilization protects females from assault, how many opportunities a civilization affords females to have both a family and a career – these are also enlightening measures of the advance of civilization.

And back to the highest intellects – human beings are the highest intellects today, but maybe not tomorrow. The far future may see the rise of civilizations based on species other than Homo Sapiens.

I again picked up my copy of Mises’s Socialism recently, and was struck once again by Mises’s passion for civilization. To Mises, economics is not an end in itself; it is merely the study of how men act to attain their goals. His book Socialism is no mere economics text, but an apologia for civilization itself. If Plato’s Republic is the question (and certainly Socrates asks a lot of questions in the Republic!) then Mises’s writings are the answer. Plato asks: What is the best government? And Mises (correctly) replies: The highest civilization.

But what is civilization? What does the word mean? What is the idea of civilization? And what is the highest civilization?

Unfortunately, civilization is one of those words that men use to mean what they want. Words like “Liberalism,” “Communism,” and so forth. For example, the opening sentence of Wikipedia’s entry on civilization is this: “Civilization or civilisation generally refers to polities which combine three basic institutions: a ceremonial centre, a system of writing, and a city.” Ugh. Mises himself would despair to read such a lowest-common-denominator, politically-correct “definition.”

Of course the natural response to criticism of Wikipedia content is: Can you do any better?

Civilization is such a rich, important topic (one that Mises spent his life on) that one should hesitate before blithely offering a one-sentence answer, or some witty bon mot. So I thought I would use a blog entry (maybe even more than one) to collect some thoughts, and list some hallmarks of civilization that seem relevant to me.

The first hallmark of civilization in any list must be individual liberty. Liberty is the touchstone of civilization; “Liberty” used not only in the legal sense but also in the capabilities sense. (For example, modern aviation gives men the freedom to fly.) The higher the individual liberty (in all senses), the higher the civilization.

Some other hallmarks, in no particular order:

Complexity. Opportunity and thus liberty cannot grow in a monoculture, they need the clash of ideas and environments to create new combinations of options and means.

Change. Much the same idea as the previous paragraph, but with the element of time.

Literacy. A civilization cannot build on its progress if it cannot record its past.

Communications. Here I mean something broader than mere language, I include the arts and fashion as well. Once a member of a civilization creates or discovers a step towards a higher civilization, how does that member teach others about that step? How does he persuade others to take that step?

Intellect. A civilization not only needs to record its past, but also analyze it.

Tools. Civilizations require tools to make progress. (Notice that the previous three paragraphs also describe a computer: memory, buses, and processor(s).)

More thoughts to come, let me end this post with the final paragraph of Mises’s Socialism:

“Neither God nor a mystical “Natural Force” created society; it was created by mankind. Whether society shall continue to evolve or whether it shall decay lies – in the sense in which causal determination of all events permits us to speak of freewill – in the hands of man. Whether society is good or bad may be a matter of individual judgment; but whoever prefers life to death, happiness to suffering, well-being to misery, must accept society. And whoever desires that society should exist and develop must also accept, without limitation or reserve, private ownership in the means of production.”

The front page article of today’s Sunday Review section of the Times bears the title: “The Perils of Perfection.” In the article, the author laments that: “Silicon Valley’s technophilic gurus and futurists have embarked on a quest to develop the ultimate patch to the nasty bugs of humanity.”

I’m always amazed that Luddites such as the author (Jacques Ellul, John Ralston Saul, Ted Kaczynski, etc.) always, always serve up the exact same tripe: that problems make us human, inconsistency makes us human, that too much perfection leads to totalitarian states. And just like Ellul, Saul, and Kaczynski, the article’s author runs quickly to hyperbole and Godwin’s Law: “… imperfection might be the price to pay for a half-functioning democracy. There is, after all, little partisanship in North Korea.”

Point one: I cannot even conceive of the backstabbing politics going on every day in Pyongyang – little partisanship in North Korea? In such a political hellhole, it is every man for himself. The author cannot be more wrong.

Point two: How many problems (that Silicon Valley engineers are working on) rob us of our humanity every day? Disease, disaster, delay – the list is endless. These problems make us human? Please.

Point three: Does the author truly have such faith in technology that he thinks the really hard problems are going to be solved so soon? If so, I have news for you: your faith is much stronger than any Silicon Valley engineer’s. (I should know, I am one.)

Toward the end of the article, the author names his bogeyman: “The ideology of solutionism.” Well, I tend to think that wading in and working on people’s problems is an immeasurably better “ideology” than Luddism.

I was reading through the August 13 & 20 issue of the New Yorker last week, and became highly engrossed in a particularly well-written article. It was an article comparing the kitchen operations of The Cheesecake Factory with the state of the practice of medicine in the US. The prose was brilliant, the analysis incisive. I almost never take note of the article writers, so halfway through the article I wondered “Who is this author?”

I should have known: it was Atul Gawande, once again. Since he writes for the New Yorker only once every few months, I always forget that he is a contributing writer. But halfway through his articles, something about his writing lights up my brain, and I say to myself “This is great writing, who is this author?” It’s a weird feeling.

In this specific article, Atul goes inside the kitchens of The Cheesecake Factory to answer the basic question: “I wondered how they pulled it off.” “The chain serves more than eighty million people per year. I pictured frozen bags of beet salad shipped from Mexico, buckets of precooked pasts and production-line hummus, fish from a box. And yet nothing smacked of mass production. … I asked one of the Cheesecake Factory’s line cooks how much of the food was premade. He told me that everything’s pretty much made from scratch …”

Atul goes on to find that a keystone of the chain’s success is the kitchen manager: “A kitchen manager is stationed at the counter where the food comes off the line, and he rates the food on a scale of one to ten.” The kitchen manager also checks the portion sizes, the plating, and the timing. One would think the line cooks would resent the micromanagement, but: “The managers had all risen through the ranks. This earned them a certain amount of respect.”

Atul also mentions the computerized inventory systems, computerized menu and recipe systems, and so forth. And then he concludes that the entire Cheesecake Factory system: managers, computer systems, inventory control – are precisely tuned to generate world-class results. World-class results are The Cheesecake Factory’s raison d’etre.

Atul then compares this to the dismal state of the practice in medicine. Since ancient times, doctors have “generally been paid for what we do, whatever happens. The consequence is the system we have, with plenty of individual transactions – procedures, tests, specialist consultations – and uncertain attention to how the patient ultimately fares.” In the article, Atul mentions doctors that are veterans, self-styled experts at what they do, but who regularly achieve mediocre results.

And this is why I most like Atul’s writing: his focus on results. As a doctor, he understands that his profession kills people. He can count the number of botched treatments, the damaged lives. He measures the results, and he works to highlight and to fix the problems. He doesn’t approach his profession as an “expert,” with his mind made up – he understands that the results can, and should, teach him his practice.

During the last few weeks, I have seen “experts” writing about many topics: “Oh how awful high-frequency trading is,” or “How awful that hospital systems make such profits,” or “How awful that robots are putting people out of work.” Of course, these so-called experts have not spent years actually working in the professions that they decry, learning about how these industries achieve results. They lack real-life experience with producing world-class results, with entrepreneurship, with capitalism itself.

Wednesday morning, Knight Capital Group launched a new trading algorithm on Wall Street and lost 440 million dollars of their clients’ (and their own) money in thirty minutes. The headlines in the New York Times are as one expects: “Trading Program Ran Amok,” “A Financial Plan For the Truly Fed Up,” “Frankenstein Takes Over The Market,” and so forth. The articles and commentary proceed to decry the “rapid-fire” nature of programmed trading, also citing other market computer stumbles in recent months: the failure of NASDAQ computers on the day of the Facebook IPO, and the recent heavy losses at JP Morgan.

These alarmist responses to algorithmic trading do the citizenry a disfavor because they foster basic misunderstanding of economics. The articles in the New York Times may be merely a populist ploy to sell more newspapers, but if they are truly misunderstandings, they are understandable ones: economics is complex. Economics is complex because human societies are complex.

But economics involves some very basic, fundamental human actions: production; trade; choice. And all of these actions rely on algorithms. Certainly production, from time immemorial, has been driven by algorithms: the ancient Egyptians created a calendar to alert them in time for planting; they created pumps and trenches to channel the Nile floods; they created hierarchies to manage water distribution.

The Egyptians are but one example: all the tools and algorithms created throughout human history to leverage land and labor more effectively are the capital of capitalism. The capital of economics.

So when writers in the New York Times state that “The machines are now in charge,” they are a bit late to the party. Millennia late, even. Because the algorithms have always been here. They’re called Capital.

I like the name of this hosting website (freecapitalists.org), although I’m unsure that anyone would recognize free capitalism even if it bit him.

I say this after perusing the first section of today’s New York Times. (Living in Silicon Valley, I receive the “national edition.”) Here is a selection of headlines: “The Drug War Shifts to Africa, Hub for Cartels”; “At 40, Steering a Vast Machine of G.O.P. Money”; “U.S, Stymied at U.N., Works to Oust Assad”; “China’s Communist Elders Take Backroom Intrigue to the Beach”; “U.S. Cutting Military Aid to Rwanda”; “Literary Festival in Italy Gives Voice to Authors and Residents in Fight Against the Mafia”; “In New Exhibit, Disney Lends Its Star Power to Reagan, and Vice Versa”; “For Coast Guard Patrol North of Alaska, Much to Learn in a Remote New Place”; and the list goes on.

After reading these headlines, one gathers that free capitalism is a mere fantasy in our 21st-century world of state capitalism. Is there any hope for respite from the unholy alliance between money and the state?

The first headline mentioned above leads an article about Mr. William R. Brownfield, an assistant secretary of state, and his architecture of new, “commando-style” anti-drug strategies in Africa. A quote from Mr. Brownfield: “We have to be doing operational stuff right now because things are actually happening right now.” Another quote from the article comes from Mr. Jeffrey P. Beeden, the chief of the D.E.A.’s Europe, Asia, and Africa section: “[Africa]’s a place that we need to get ahead of – we’re already behind the curve in some ways, and we need to catch up.”

The language of these drug warriors is illuminating: “We have to be doing,” “We need to catch up.” This is the language of desperation, of lack of control. One almost expects to hear: “Hurry, hurry, I need my fix.” Obviously, the drug users are not the only addicts of this war. In fact, the real victims, the users, are never mentioned in the entire twenty-three paragraph article.

Many believe the solution to the drug war is just to stop fighting – to let the market work. But a market that enslaves its customers is no free market. I fervently hope that twenty-first century technology and medicine can start eliminating addictions, and so make the market for all addictive substances truly free. And if one eliminates substance addiction, then one stops the drug war, right?

Unfortunately, no. Vastly more money is spent by the U.S. government for interdiction than for elimination of addiction. This is because drug warriors such as Mr. Brownfield and Mr. Beeden are also addicted – to the war itself, to the power it brings them, to the attention it brings them, to its violence, to its speed.

As the above headlines attest, if there is to be hope for free capitalism, the addiction to power is the addiction that needs to be eliminated.

One of my all-time favorite TV shows is the BBC’s “Chef!” with Lenny Henry. Episode 4 of season 1 (“The Big Cheese”) is almost perfect: unpasteurized Stilton, Rachmaninoff, Albert Roux, and of course amazingly witty repartee.

Lenny Henry plays Gareth Blackstock, Chef de Cuisine of Le Chateau Anglais. The underlying storyline of season 1 is the impending bankruptcy of the restaurant, and the resulting need for the Blackstocks to purchase the restaurant to preserve Gareth’s job.

Of course, the Blackstocks don’t have sufficient capital to buy the restaurant, so they see a loan officer. Since nothing is more important to Gareth than his cooking, he despises having to admit that it is up to a bank to decide whether he should continue as chef. Gareth thus harangues the officer about how he, Gareth, is the important one in the deal since he is the one “at the coal face” while the loan officer merely “lollygags” in his “tilt and swivel.”

After Gareth’s wife calms him down (by threatening divorce), Gareth finally admits that the deal requires two sides: the “unreasonable” side taking risks, and the “reasonable” side that must weigh the risks objectively.

And thus the point of this blog post: at a time when banks are being vilified by all sides – and they do deserve much vilification (LIBOR, mortgage crises, the Great Recession) – they also deserve some credit for controlling inflation. When governments betray the public trust by printing literally trillions of dollars, someone has to assume the reasonable side and weigh the risks. By (finally!) controlling their loan activity, the banks are protecting the dollar from the massive onslaught of government presses.

In an age of automated production, marketing blitzes, and paper money, a market cannot function for long without ever more discerning consumers. The banks are finally playing that role.

As I have mentioned a few times in my last several posts, for the past eighteen months I have been touring the set of Britannica’s Great Books that a friend gave to me. Among the many classic works of history and literature are included some of the classic works of science: Newton’s Principia, Darwin’s Origin of Species, and a score of others.

Reading and thinking over the greatest books of the Western world start to give one the insight that some of the greatest scientists of all time understood time itself in a fundamental way. And they transformed whole fields of science by showing that the comprehension of time changes everything. Newtonian mechanics is based on time as the independent variable. Darwin saw mutation and selection working through the epochs. Einstein saw that time changes with velocity. And so forth.

So in the great books, one sees a greater and greater rift developing as field after field of science breaks free from the static, authoritative, bureaucratic thought of the Roman empire and the Roman church. Throughout history, one can track the progress of the upstart scientists as they finally must turn away from the voice of authority, the voice of the scholastic, the hegemony of conservatism.

And so it is with Mises. Mises’s fundamental comprehension of the role of time transforms economics. Mises as the true liberal scientist finally must overthrow the narrow, static myths of the conservative authorities of both the right and the left. From the regression theorem to the diachronic effects of inflation, from interest as the time preference for money to the Austrian theory of the business cycle, again and again Mises opens the eyes of his readers to the true nature of time in economics.

And what is capital, if not the storage of resources that can be moved
through time and space? If the entrepreneur is not allowed to move
capital through time and space, to apply it at the exact point of
space-time where it has the most utility, then we all become that much
poorer.

Thus while lesser economists lounge on the beaches with their static analyses and graphs of the equilibrium between supply and demand, Mises launches into the ocean of a truly dynamic economics. The evenly rotating economy that is the (unwitting) basis of all central planning is completely destroyed by Mises’s understanding of the nature of entrepreneurial action over time. Static economics is worse than no economics at all, and Mises knows it.

I am always amazed at the massive difference between Keynes and Mises – one of the most important being that of their differing emphases on time. Keynes is the great champion of the Present: “In the long run, we are all dead.” Mises is the champion of the Future: “At the outset of every step forward on the road to a more plentiful existence is saving.”

Now one always weighs present satisfaction against future satisfaction when one makes decisions about what (and if) to consume. So the Present is always battling against the Future. The Future is always struggling to be born.

But when Keynesians cause massive deficit spending, fiat money, inflation, social insurance, medicare, rising college costs, government schools, lack of jobs, wars (in which the young die), etc., one gets the distinct impression that they are working hard to throw our children under the bus.

So it is Mises’s clear emphasis on capital and saving, his emphasis on the Future, that automatically makes him the great “Champion of Children.” Mises emphasizes that stored capital makes for a “more plentiful existence” in the Future.

Everyone has great empathy for children that are developmentally disabled. But when our children are shackled by massive Keynesian debt, who can argue that they have been economically disabled? Capital is the freedom to grow, is the freedom for our children to grow in the future.

Obviously, not all capital consumption is caused by government; short-sighted corporations also consume massive amounts of capital, especially when they lay waste to our environment. But there exist harsh market disincentives for this behavior.

Unfortunately the forced consumption caused by government is not so controllable. Every day, a plebiscite occurs in the marketplace; one can change government only every few years. And as the years tick by, the forced consumption becomes locked in. Many times, at the point of a weapon.

Any baboon can emphasize the Present; in fact, all baboons do. It takes a man, a leader, to envision a better future and to lead the masses to it. Any animal can eat its young; it takes a man to build and to protect the future of our children. It takes a champion.

As I said a couple blog entries ago, a friend of mine gave me the full set of Encyclopedia Brittanica’s Great Books last year. The editors of the series mention that they did not allow any twentieth-century works, as the works were too recent (as of the 1950s) to evaluate as “Great Books.”

Over the last year, I have often thought that several of Mises’s works could be appended to the set as some of the greatest twentieth-century work; at first glance, Mises seems to be a culmination of twenty-five centuries of great writing. Certainly Mises knows government better than Plato or Hobbes; Mises knows economics better than Smith and Marx, and so on.

But then I started reading Dante … and it hit me how Roman Dante is. The two pillars that Dante stands on are obviously the empire (Virgil) and the church. Every page is filled with Roman dogma, Roman poetry, the Roman worldview.

And then I started considering some of my favorites in the entire set of the Great Books: Plutarch, Gibbon, Milton, Cervantes, … they’re all Roman! And even some of my least favorite: Ptolemy, Augustine, Aquinas, … they’re Roman, too! Wow: the Great Books are profoundly, fundamentally Roman; the Great Books are Roman Books, Roman Thought.

Now the point about thinking like a Roman is that your worldview is dominated by (a static) hierarchy, with its peak at the center. You have a fixed (static!) point of authority. The Roman system is all about hierarchy – one looks to Father God, or the Founder (Aeneas), or il Papa for solutions. (And certainly Father God doesn’t change!)

And even some of the Greeks are Roman in that way: in Plato’s Republic, Socrates himself looks to a king for solutions. (Of course, that king is supposed to be Socrates himself – never mind looking to the center: Socrates though of himself as the center!)

So when one starts to blame Washington or some more local government for the allegedly poor state of education in America, one needs to take a huge step back and consider that all Western education is steeped in twenty-five hundred years of centralized, hierarchical thought. For over two millenia, all solutions have been sought from “up the hierarchy,” from some central authority. That’s important enough to repeat: no one thinks for himself; all solutions come from authority.

I would even argue that the US doesn’t have a central bank only because JP Morgan wanted one; the US has a central bank also because all Westerners have been taught to kowtow to centralized authority for millenia. Literally millenia!

This is also why the national monuments are Roman temples – it is the highest praise to be deemed the center of the universe.

Thus how profoundly different Austrian thought is. Mises dares to be decentralized, dynamic in his thought. Mises dares to blaze a different trail, to defy convention and tradition. Mises weaves a radically new worldview of changing prices, dynamic entrepreneurs, markets full of economic agents. Everyone makes choices.

And so I hope that as technology progresses, the twenty-first century becomes a century of decentralized, Austrian thought. There are signs of hope: everyone now knows that computer technology has hit the central processing wall; computers are now gaining speed only by becoming ever more decentralized. The internet is decentralized. The major media are no longer seen as authoritative. Millions of participants in MMORPGs are starting to grapple with (simulated) economic problems. Private industry is getting into space. And so forth.

And of course, the growing presence of the Mises Institute itself argues for a changing worldview. But the change will take time – one doesn’t overturn 2500 years of great writing overnight.